Google to pay $500 million fine for rogue pharma ads

Google is set to pay the feds $500 million to settle criminal charges it …

Google is reportedly set to hand over half a billion dollars to the feds to settle a criminal investigation into the search giant profiting from rogue pharmacy ads, according to the Wall Street Journal.

Google revealed a hint of the settlement earlier this week in a filing to the SEC that said it was setting aside $500 million for a government settlement, but didn’t specify why.

According to the WSJ’s Thursday report, the FDA and Rhode Island’s attorney general have been looking into whether Google profited illegally from ads placed by non-US pharmacies. Google and other search sites blocked many overseas pharmacy ads in early 2010, because it’s illegal for U.S. citizens to have such drugs imported.

Google did, however, make an exception for Canadian pharmacies—though it limited them to ones approved by a licensing body.

That compromise may not have been enough or soon enough for the authorities, who look set to extract a very large penalty from the search and online ad giant. Importing drugs into the US is not legal, though the feds almost always turn a blind eye to drugs from Canada and don’t prosecute individuals.

Google changed its policy on pharmacy ads in February 2010, so that it would only take ads from US pharmacies accredited by the National Association of Boards of Pharmacy, and from online pharmacies in Canada that are accredited by the Canadian International Pharmacy Association.

US citizens order from Canadian and overseas pharmacies to get cheaper prices on medicine, though it’s illegal even with a prescription or for drugs not available in the I.S.. Online ordering also carries a higher risk of encountering counterfeit pills. Last summer, a 22 year-old Canadian was sentenced to 33 months in a U.S. federal prison for selling fake cancer-fighting drugs over the internet.

Still, it’s not clear that extracting $500 million from Google’s rather full coffers is going to do much to stop the business of online pharmacies. Those sites are already masters of spam e-mails and spam websites, in no small part because expensive prescription drugs and health insurance create a lot of demand.

And now instead of paying a US-based company for online ads, those pharmacies will simply invest that money into getting to the top of that site’s search results by spending more money on spammy websites and black-hat SEO.

32 Reader Comments

I'll take the article's word for it that it is illegal to import drugs from Canada (or Mexico) by using the internet. However it is legal for US citizens to travel into Canada (or Mexico) by normal means, buy drugs that are over-the counter in that country, and bring the drugs back into the USA. This is provided that a) when you go through Customs, you declare the drugs; b) you don't buy more than a three-month supply; and c) the drugs are for your personal use, not for resale.

"And now instead of paying a US-based company for online ads, those pharmacies will simply invest that money into getting to the top of that site’s search results by spending more money on spammy websites and black-hat SEO."

"And now instead of paying a US-based company for online ads, those pharmacies will simply invest that money into getting to the top of that site’s search results by spending more money on spammy websites and black-hat SEO."

Why the hell is it illegal to buy meds outside of the United States? Someone explain to me please. I'm interested in knowing the details of this. Just particular meds? Meds in general?

Well, in Denmark it is also illegal. The reason cited here is to protect the public health. People importing meds from abroad may get fake medicine thus damaging themselves, or the may be self medicationg without their doctors supervision.

In the US, the reason may be the same. Or it may be the pharmacy lobby's work, in order to prevent competition. I suspect US medicine is more expensive due to the way your healthcare system works. The government has no interest in keeping prices down, as they are not paying for the medicine.

Did those of you bitching about his sentence miss the FAKE part? If people are buying them in the hopes that those drugs are treating thier cancer then that person is A: Ripping them off and B: killing them by making them think they're taking medications when they aren't. He got off light IMO.

I think the pharm companies can take a note from the music/movie pirating issues; if you price yourself incredibly high of course people will seek out alternativies. When Rx cost is most of your monthly income of course you'll try to find ways to lower that cost.

Also don't US people get tired of getting shafted by big corporations every single day and watching it get worse all the time?

Yeah, but on this issue, we don't really have anywhere to turn. Of our two political parties, one (Dems) is in favor of heavy pharmaceutical regulation; the other (Reps) is in favor of Big Pharma protectionism. So both like cracking down on foreign pharmaceuticals.

And the other option the Europeans always seem to bring up (leaving the country) really just isn't as attractive as you make it out to be, unless we get our families and friends to learn a new language and move with us.

A disturbingly candid admission by a top Google lawyer in Stephen Levy’s book In The Plex – that “Google’s leadership does not care terribly much about precedent or law” – spotlights exactly why Google is serially under investigation by Federal and state law enforcement. Given that no other major public company claiming to be reputable faces the breadth, variety and seriousness of Federal, state and international law enforcement investigations that Google is experiencing, it is clear that the top Google lawyers’ assessment of Google’s leadership’s disrespect for the law – is sadly spot on.

Google just doesn't care as long as it makes its money and gets its market share.

Also don't US people get tired of getting shafted by big corporations every single day and watching it get worse all the time?

Yeah, but on this issue, we don't really have anywhere to turn. Of our two political parties, one (Dems) is in favor of heavy pharmaceutical regulation; the other (Reps) is in favor of Big Pharma protectionism. So both like cracking down on foreign pharmaceuticals.

And the other option the Europeans always seem to bring up (leaving the country) really just isn't as attractive as you make it out to be, unless we get our families and friends to learn a new language and move with us.

Apparently everything on the internet is Google's fault. <sarcasm>Can we start suing GoDaddy for hosting the websites that have illegal activity, maybe we could just sue the internet for allowing these companies to profit illegally online. We could sue the Yellow Pages for listing companies that do illegal activity, they are profiting from illegal activity after all.</sarcasm>

In Canada it is illegal to host ads on TV for a prescription drug, so what if I'm watching a US version of FOX on satellite in Canada and I see an ad for a prescription drug? That ad has been delivered to me illegally in Canada, so who is at fault? My point is that this is a grey area don't sue the proxy, sue the offender! Stop blaming Google for everything! Google indexes the internet and sells ads, the internet is full of things that will offend you and will be illegal, accept it Grandpa, let the police police it, this is life don't expect that the government can draw a line in the sand and Google can flip a switch and automatically censor every bad thing on the internet, your own Government can be the a**hole who gets that job, and when you don't like it, sue them!

I mean, I know it's wired and all, so we can't expect great things, but at least differentiate setting aside money for a settlement and the amount of an actual settlement. the new york times has considerably better coverage: http://www.nytimes.com/2011/05/13/techn ... oogle.html

Wired and Ars Technica will really protect Google at any costs, huh? No matter what they do, you can always count on Ars and Wired to tell us how they weren't truly at fault.

Classic.

WTF were you reading? There's nothing in this article that even remotely implies Google was not at fault.

Though I disagree that it is a common trend for Ars Technica (I can't speak for Wired) to have a bias in favor of Google, the final paragraph has the implication that government ignorance of this event is better than them punishing Google.

Why the hell is it illegal to buy meds outside of the United States? Someone explain to me please. I'm interested in knowing the details of this. Just particular meds? Meds in general?

A French representative my wife taught before told her that when on an official trip to the US she sprained her ankle and had to buy a balm. She had to pay more than 100$ for a tube that is about 5€ here. I think it explains why it's illegal to buy meds outside the US, and that has nothing to do with protecting the consumer or health safety issues (online pharmacy aren't less secure than B&M, especially for over the counter drugs - as long as the pharmacy is accredited, and not one of the shams that were created because of the US insane drug prices).

A 90% markup over already healthy prices buys you all the senators you need to protect your revenue.

"And now instead of paying a US-based company for online ads, those pharmacies will simply invest that money into getting to the top of that site’s search results by spending more money on spammy websites and black-hat SEO."

Are the companies providing web hosting, workstations, shipping, and other random business needs be on the hook? Can UPS (or whoever.. USPS?) be liable for shipping the banned drugs? I suppose foreknowledge about the customer's business would be part of the answer in a reasonable legal system.

33 months for selling illegal cancer drugs. It's OK if they put other limitations after the 6 months. How's about can't ever sell anything online again, can't get anyone else to sell anything for him. Like from that movie hackers but not to that extreme because I wouldn't want to take the internet/computers away from anyone in this day and age. My remote control is a freaking computer these days.